I’m Professor and Chair of the Department of Economics at LIU Post in New York. I’ve published several articles in professional journals and magazines, including Barron’s, The New York Times, Japan Times, Newsday, Plain Dealer, Edge Singapore, European Management Review, Management International Review, and Journal of Risk and Insurance. I’ve have also published several books, including Collective Entrepreneurship, The Ten Golden Rules, WOM and Buzz Marketing, Business Strategy in a Semiglobal Economy, China’s Challenge: Imitation or Innovation in International Business, and New Emerging Japanese Economy: Opportunity and Strategy for World Business. I’ve traveled extensively throughout the world giving lectures and seminars for private and government organizations, including Beijing Academy of Social Science, Nagoya University, Tokyo Science University, Keimung University, University of Adelaide, Saint Gallen University, Duisburg University, University of Edinburgh, and Athens University of Economics and Business. Interests: Global markets, business, investment strategy, personal success.

Can An Irish Start-up Challenge Starbucks?

For years, StarbucksStarbucks managed to dominate the coffee shop market. The secret? Development of a business model known as the “third place,” an affordable luxury where people could share and enjoy a cup of coffee with friends and colleagues away from home and work.

The concept isn’t new. For a long time sociologists have talked about the need for a place in large cities, beyond home and office, where life can revolve.

“Life without community has produced, for many, a life style consisting mainly of a home-to-work-and-back-again shuttle,” writes Ray Oldenburg in The Great Good Place. “Social well-being and psychological health depend upon community…. third places… are the heart of a community’s social vitality…”

What was new in Starbucks’ concept was the way the company combined the speed and convenience of McDonald’s with the comfort of a home living room, and the community spirit of a village coffee shop.

Starbucks rode the baby boomer trend in the 1990s, the swelling ranks of middle-age professionals which precipitated the need for such a space. The chain inserted itself into the American urban landscape more quickly and craftily than any retail company in history, and forever changed the way Western companies market themselves to consumers.

Now, here comes The Third Space, an 18-month old start-up to challenge Starbucks.

Located in Smithfield, Dublin, Ireland, Third Space features open space dining, living room and office facilities, decks stuffed with books, and a stand with free newspapers. That’s a setting which bundles the amenities of home and office with the spirit of a community center.

Translation: customers can use the Third Space at anytime of the day, as a dining place, a living room, or an office, a community center.

To be fair, The Third Space is just one store rather than a chain of stores, and it may take years before it expands into other locations. “The plan is to refine the model,” says Sean Mullan, founder of The Third Space. “Then move towards opening Third Spaces in other parts of the city. Slowly, three to four stores in total.”

That’s close to one-third of the total stores Starbucks has in Ireland.

Nonetheless, The Third Space is a departure from Ireland’s traditional coffee-shops and pubs, and the concept can spread quickly throughout Europe, where austerity has lowered the cost of commercial space and has revived the need for a third place. That can certainly slow Starbucks’ growth.

The bottom line: “The third place” isn’t a proprietary concept. Starbucks has an “early mover” advantage to sustain its popularity. But others are catching up, with their own versions of the concept. It’s up to consumers to decide which company has the best version. Nonetheless, the market is beginning to get crowded. That’s where Starbucks’ challenge is.

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